By Steven Enatu
SOROTI CITY
The farmer community in Teso sub region has asked the management of Bank of Uganda to consider opening a financial institution that specifically helps farmers to easily acquire Agricultural loans with low interest rate.
These say the commercial Banks that Bank of Uganda uses to channel Agricultural Credit facility does not resonate with the farmers as expected.
Agricultural credit facility fund was set up in 2009 by the government in partnership with commercial Banks, Uganda development banks and credit institutions to facilitate provision of short, medium and long term loans to projects engaged in Agricultural and agro processing on a low interest rate of 12% per annum.
However during the town hall engagement meeting with the general public on 4th May, 2023, Bishop Emeritus George William Erwau of Church of Uganda told Bank of Uganda officials that the Agricultural Credit Facility in commercial banks are not accessible.
He said that the commercial banks instead manipulate farmers to pick their loans at a higher interest rate of up to 16% instead of the Agriculture Credit Facility.
Erwau appealed to the government to consider using another alternative like opening an Agricultural bank that directly deals with farmers.
The retired Bishop and many other farmers who were in the meeting are optimistic they would be of great help to the farming community other than the commercial banks with interest in making profit.
According to the UN’s Food and Agriculture Organization, Uganda’s fertile agricultural land has the potential to feed 200 million people. Eighty percent of Uganda’s land is arable but only 35% is being cultivated.
In FY 2021/22, agriculture accounted for about 24.1% of GDP, and 33% of export earnings.
The latest Uganda bureau of statistics (UBOS) report estimates that about 70% of Uganda’s working population is employed in agriculture. This means that the government through its agencies should ensure that farmers are supported with loans that are easily accessible and affordable.
While responding to the concern, Alex Lwanja, the deputy director Agricultural credit facility and small business recovery fund said so far 751 billion has been disbursed to 3079 farmers who have accessed the fund.
He said the Bank of Uganda does not deal with the public directly as directed by the Bank of Uganda act, financial institution and the constitution of Uganda.
This therefore means farmers should go to the commercial banks regulated by the Bank of Uganda and ask for the loan.
The town hall meeting is organized by the central bank of Uganda with the purpose of communicating to the public about the role of the Bank of Uganda and to get the feedback from the public on the bank’s performance. This is according to Andrew Elwana, head of corporate affairs BoU.
